The impact of supply chain disruption crisis is like "butterfly wings", affecting the whole body. Rising cases of COVID-19, extreme weather events and the blockage of the Suez Canal have created additional supply chain challenges this year.
The editor of Zhanglian has taken stock of the 10 supply chain disruptions that will "shock" the world in 2021.
1. The U.S. Treasury Department sanctioned Chinese companies, hindering the security of the global industrial chain and supply chain and the recovery of the world economy.
On December 10, 2021, the U.S. Treasury Department used the so-called "human rights violations" as an excuse to impose sanctions on China, Russia, North Korea, Myanmar A total of 15 individuals and 10 entities from five countries including Bangladesh were included in the sanctions list of the U.S. Department of the Treasury’s Office of Foreign Assets Control, including 3 Chinese citizens and multiple Chinese companies. On December 16, the U.S. Department of Commerce added 34 Chinese companies to the Entity List, tearing apart the chip, technology, and pharmaceutical product supply chains between China and the U.S. and European markets.
The continued expansion of the scope of suppression of Chinese companies shows the policy direction of the United States to continue to "decouple" from China in high technology. The field of science and technology, especially those related to military affairs, is not within the so-called "scope of cooperation with China" defined by the United States itself. In the future, the United States may continue to use all means to suppress China's scientific and technological development. The wrong approach of the United States is not conducive to China and the United States, and is not conducive to the security of global industrial and supply chains and the recovery of the world economy.
2. The Suez Canal was "locked" by Taiwan Evergreen, and the lifeline of the global economy was "interrupted"
In March 2021, the " Changci " of Taiwan Evergreen Shipping was located 6 nautical miles away from the southern mouth of the Suez Canal in Africa. , blocking this main artery of world trade.
It is reported that despite the global economic quarterly contraction in 2020 and the drop in oil prices caused by the COVID-19 epidemic, 18,829 ships still passed through the Suez Canal, with a total net tonnage of 1.17 billion tons, the second highest annual net tonnage in the history of the canal. tonnage. This maritime "throat" with a width of only 300 meters and a length of less than 160 kilometers can shorten the voyage from Asia to Europe by nearly 8,000 kilometers and shorten the time by 7-10 days.
Data shows that due to the blockage of the "Changci", the maximum number of ships waiting in the Suez Canal reached 367 vehicles. The shipowner has since received a statement of claim from the Suez Canal Authority for US$916 million to cover losses incurred during the grounding.
3. The surge of new coronavirus in India has hit the raw material and manufacturing supply chains of many industries around the world.
Statistics show that the total number of new crown cases in India has reached 34.7 million, and the number of deaths has reached 477,000. A wave of coronavirus cases in India has impacted raw material and manufacturing supply chains across multiple industries globally.
The supply of raw materials has been hit: In addition to the United States, India and China are the two largest markets for the supply of raw materials in the world, and together they account for about 21% of the global industrial chain. The epidemic in India directly caused a shortage of oxygen , and some equipment manufacturers had to stop production to produce oxygen for patients. About 80% of active pharmaceutical ingredients produced in India are also in short supply. India is also a major vaccine producer. Due to the resurgence of the epidemic, vaccine export plans have been frequently blocked.
Manufacturing supply chain is on hold: some international technology giants such as Apple and other companies have set up factories in India, Tesla also intends to set up new factories in India. Taking Apple Inc. as an example, its business in India achieved more than 60% year-on-year growth in 2020, and in the last quarter, the year-on-year growth reached an astonishing 100%. However, after the strict lockdown measures were implemented, most companies were forced to close their factories, which will have a certain impact on the global supply chain.
4. Shenzhen Yantian Port is congested, global shipping and global trade have been impacted
On May 21, 2021, an employee Mu in the west operation area of Yantian Port, Shenzhen was diagnosed with new coronavirus pneumonia. After that, medical staff immediately started to carry out treatment for relevant key groups. Check.As of June 1, after the third round of global nucleic acid testing and screening in Yantian District, a total of 15 asymptomatic cases of asymptomatic infection were detected in the city during the "5·21" epidemic.
Global Shipping Impact: According to data from Flexport, Shenzhen Yantian Port is the third largest port in the world, with Yantian Port handling 13.3 million TEUs in 2020 alone. By comparison, the Port of Los Angeles, the largest U.S. port, moved just 9.2 million TEUs in the same year. Global shipping prices continue to hit new highs, and the tight supply and demand situation may be difficult to change in the short term. Nowadays, shipping is faced with multiple problems such as difficulty in booking , serious port congestion, and unstable shipping schedules. The international logistics system is full of difficulties.
Global trade impact: With the arrival of peak seasons in the second half of the year in Europe and the United States, such as Halloween, Thanksgiving, Black Friday, Cyber Monday, and Christmas, these festivals with strong consumption power are concentrated from September to December, resulting in domestic exports overseas in June. The surge in orders has brought a new round of challenges to the global maritime logistics network amid a sudden surge in demand and insufficient supply.
5. The inland container transportation in the United States is overwhelmed, and Union Pacific has suspended services from the West Coast to Chicago
Starting from July 18, 2021, Union Pacific, the largest railway operator in the United States, has suspended services from the West Coast port (Los Angeles) /Long Beach, Oakland, Seattle and Tacoma) deliver containers inland, especially Chicago, for a period of 7 days. The suspension is intended to help ocean carriers reduce cargo backlogs by limiting imports from the United States to increase liquidity and throughput.
Logistics is a system after all. The long-term congestion at the port has caused the rail freight volume at the Union Pacific import and export port to approach historical limits. The supply chain pressure has spread from the shortage of labor initially affected by the epidemic to the shortage of trucks and trains.
6. Frequent wildfires in the United States threaten California ’s logistics network
From January to May 9, 2021, California experienced 1,812 fires, twice the average number of fires in the previous five years, and the burned area was With three times the number of fires in the previous five years, frequent fires have seriously threatened California’s logistics network.
The wildfire disaster caused delays in logistics delivery in California, USA. The transportation efficiency of local containers and warehouse packages was greatly affected, and the efficiency of logistics distribution and transportation was seriously damaged.
7. The United States concocted the Xinjiang cotton incident to attack China’s cotton supply chain
On March 25, 2021, H&M Group issued a “due diligence” statement on China’s Xinjiang cotton, claiming that ethnic minorities in Xinjiang were subjected to forced labor and religious discrimination. reported concerns. BCI and the United States imposed sanctions on Xinjiang cotton, causing European and American apparel companies to abandon Xinjiang cotton for a time. Subsequently, it was revealed that many multinational apparel brands, such as Nike, Adidas, ZARA, and Gap, had issued similar statements.
Chinese companies participating in BCI are mostly upstream or mid-range companies in the industry chain. The reason why they join BCI is mainly because they hope to occupy a more favorable competitive position in the export trade market through the supply chain alliance formed by the plan. Almost all member companies in the lower reaches of the industrial chain are European and American companies. Once European and American companies really boycott Xinjiang cotton, China's cotton spinning companies involved in the export trade business are bound to be affected.
8. The Shanghai Pudong Airport cargo terminal is paralyzed, and air cargo prices are rising.
On August 20 and 21, 2021, the Shanghai Health Commission reported 5 new local confirmed cases of new coronavirus pneumonia, all of which were overseas cargo aircraft operations at Shanghai Pudong Airport. personnel. From the afternoon of August 20, the international freight and passenger-to-cargo outbound support provided by Pudong Airport's ground service will cease operations, and the recovery time is to be determined.
Data shows that Pudong International Airport is the third largest cargo airport in the world in 2020 (after Hong Kong International Airport and Memphis International Airport) and the second largest international cargo airport (after Hong Kong International Airport), with daily cargo flights of approximately It is more than twice that of Guangzhou and Shenzhen combined.
The suspension of Pudong Airport has led to an escalation in the rise in air cargo prices. According to Air Cargo World, air cargo prices on trans-Pacific routes and Asia-Europe trade corridors have increased by 20%-40% in August. Confirmed cases were discovered at Pudong Airport and epidemic prevention and control measures were strengthened, which is expected to cause air cargo prices to rise again.
Category 9 and Category 4 hurricane "Ida" landed in the United States, and American logistics once faced a shutdown
On August 30, 2021, Category 4 hurricane "Ida" made landfall in the southern United States on the 29th in the southern United States Louisiana, with maximum sustained wind speeds of about an hour 240 kilometers, bringing life-threatening winds and storm surges that may cause flooding.
"Ida" made landfall in Louisiana, and the state had to close ports and stop rail operations, which will have a long-term impact on Louisiana's manufacturing and supply chains. Cargo operations at the Port of New Orleans were closed Monday, including container and breakbulk terminals. Flood gates and rail operations are also closed, along with the Norfolk Southern Terminal at New Orleans .
10. Vietnam blocked millions of people and fled factories, and the global manufacturing supply chain faced a shutdown
Since the outbreak of the new coronavirus, Vietnam has accumulated a total of 1,493,237 confirmed cases of new coronary pneumonia, ranking 32nd among 223 countries and regions. . A surge in confirmed cases has forced factory closures across southern Vietnam, hitting one of the world's busiest apparel and footwear manufacturing hubs.
Take Nike as an example. About three-quarters of Nike's footwear products are produced in Southeast Asia. Among them, shoes made in Vietnam accounted for 51% of the total, while shoes made in Indonesia accounted for 24% of the total. The production restrictions and suspensions of Vietnamese factories from July to September undoubtedly dealt a major blow to Nike. During this period, Nike's footwear production alone decreased by 180 million pairs.
Vietnam plays a pivotal role in the global consumer economy. In addition to Nike, Wal-Mart 's furniture, Adidas' sports shoes, and Samsung's smartphones have all been severely affected.
(Author: Hu Xueqin)
